For the next several years, <a href="http://www.google.pl/#q=tax preparer training" title="google tax preparer training” target=”_blank”>tax preparer training will emphasize reminders about potential taxpayer repayment of the First-Time Homebuyer Credit. The first tax year impacted by this issue was 2010. The IRS attempted sending letters to taxpayers last year who were identified as having claimed the repayable credit. Now the IRS provides an online tool to look up First-Time Homebuyer Credit information for any individual.
Conducting tax preparer jobs on 2011 tax returns is a lot easier for situations where individuals don’t remember or even realize their repayment obligation for the First-Time Homebuyer Credit. People who purchased homes in 2008 were entitled to the credit of up to $7,500. That credit was basically an interest-free loan. Repayment in equal installments over 15 years is required.
Software used when becoming a tax preparer typically prompts asking about the First-Time Homebuyer Credit. Tax practitioners can now obtain answers by using the IRS website tool. The details provided include the exact amount of tax credit received by an individual. One-fifteenth of that amount is the repayment figure a tax preparer adds to the amount of tax calculated on a return.
To access the First-Time Homebuyer Credit tool requires the taxpayer’s Social Security number, date of birth, and address. When the credit was claimed on a joint 2008 tax return, half of the tax credit is considered each individual’s repayment obligation. Therefore, use of the online tool may necessitate a look up of the situation for each spouse.
Individuals who claimed the First-Time Homebuyer Credit may have to provide extra information to create an accurate tax return. The rules from a tax preparer course reveal special treatment for taxpayers who sold their homes or stopped using them as their main residences. In these cases, the entire unpaid balance of the First-Time Homebuyer Credit is repayable on the tax return for the year of either event. The IRS tool renders the balance remaining along with the original credit and prior repaid amounts.
Balance repayment also applies to a person who claimed the First-Time Homebuyer Credit in 2009 or 2010 and sells or stops using the home as a main residence. Fortunately, the IRS online tool renders First-Time Homebuyer Credit information taken on the tax returns of any year.
Form 5405 is used to report repayment of the First-Time Homebuyer Credit for people who stopped using as a main home the house on which they claimed the credit. For cases of simple installment repayment, line 59B on Form 1040 is used to record the annual amount. This adds to the income tax liability on an individual return, thus causing either a reduced refund or higher amount payable.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
